How UAL (United Airlines Holdings) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a major airline like United Airlines (UAL) makes money is essential for investors and anyone interested in the business of aviation. In this post, we break down United Airlines's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

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Quick United Airlines Overview

United Airlines operates as a leading U.S. passenger airline, providing scheduled air transportation services across domestic and international routes. Revenue comes primarily from passenger tickets, supplemented by cargo services and ancillary products like loyalty program fees and onboard sales. The company focuses on a hub-and-spoke model with major hubs in Chicago, Denver, Houston, Newark, San Francisco, and Washington D.C., serving a vast network of destinations.

Revenue Breakdown

• Total Revenue (Q4 2025): $15.4B (+4.8% YoY)
  • Passenger Revenue: $13.9B (90.4% of total)
  • Other Revenue by Product: $0.981B (6.4% of total)
  • Cargo Revenue: $0.490B (3.2% of total)
  • Growth is powered by strong passenger demand recovery and premium cabin upgrades, with passenger revenue up 4.9% YoY despite a -6.0% dip in cargo.

Gross Profit and Margins

• Gross Profit: $9.875B (64.1% gross margin)
  • Cost of Revenue: $5.522B (+6.6% YoY)
  • United Airlines maintains robust margins due to fuel hedging efficiencies, high aircraft utilization, and premium seating revenue outpacing variable costs.
• Most costs come from aircraft fuel, labor for flight operations, and aircraft maintenance.

Operating Income and Expenses

• Operating Income: $1.386B (+-7.8% YoY, 9.0% margin)
• Operating Expenses: $8.489B (+5.9% YoY)
  • R&D: N/A — Airlines typically do not report standalone R&D; innovation focuses on fleet modernization and tech integrations.
  • SG&A: $0.571B (+3.6% YoY, 3.7% of revenue) — Covers administrative functions, marketing, and distribution costs like booking fees.
  • United Airlines continues to prioritize innovation while maintaining efficiency, with investments in digital booking platforms and sustainable aviation fuel amid rising labor and fuel pressures.

Net Income

• Pre-Tax Income: $1.325B (+1.4% YoY, 8.6% margin)
• Income Tax: $0.281B (21.2% effective tax rate)
• Net Income: $1.044B (+6.0% YoY, 6.8% net margin)
• United Airlines converts a significant portion of sales into profit due to operational leverage from high fixed costs and pricing power in premium segments.

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What Drives United Airlines's Money Machine?

• Passenger Revenue: 90.4%+ of revenue / Core driver from ticket sales across economy, premium economy, business, and first class on long-haul and domestic flights.
• Load Factor and Yield: High passenger volumes with average yields supported by dynamic pricing; Q4 2025 saw steady demand post-pandemic.
• Fleet Investments: Ongoing orders for fuel-efficient aircraft like Boeing 787s to cut costs long-term.
• Future growth areas: Loyalty program expansion (MileagePlus) and cargo optimization, though cargo remains volatile and not yet a major profit center.

Visualizing United Airlines's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially cost of revenue like fuel and labor) taking the largest chunk.
• Even after significant costs, 6.8% of revenue drops to the bottom line.

Key Takeaways

• United Airlines's money comes overwhelmingly from passenger revenue
• High gross and net margins illustrate the power of United Airlines's asset-light hub model with premium revenue
• Heavy investment in fleet and technology, balanced by efficiency in operating costs
• Ongoing growth is driven by travel demand and ancillary fees

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FAQ About United Airlines's Income Statement

1. What is the main source of United Airlines's revenue in 2025?

United Airlines generates over 90% of its revenue from passenger revenue. Additional revenue sources include other products (6.4%) like loyalty fees and onboard sales, plus cargo (3.2%).

2. How profitable is United Airlines in Q4 2025?

United Airlines reported net income of $1.044B in Q4 2025, with a net margin of approximately 6.8%, reflecting strong profitability driven by high gross margins and cost controls.

3. What are the largest expense categories for United Airlines?

The biggest expenses on United Airlines's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached N/A in Q4 2025, as United Airlines prioritizes fleet upgrades and digital tools.

4. Why does Cargo Revenue operate at a loss?

Cargo, despite generating $490M in revenue, posted challenges reflected in overall segment dynamics in Q4 2025. This is because United Airlines aggressively invests in capacity amid supply chain volatility, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does United Airlines's effective tax rate compare to previous years?

United Airlines's effective tax rate in Q4 2025 was 21.2%, consistent with previous years. This moderate rate is primarily due to standard corporate tax structures and some international operations.